This page has been archived and commenting is disabled.
Gold As A Store Of Value
For those with doubts after a nine-month correction in gold (and especially over the last few days), Brent Johnson of Santiago Capital reminds us that 'nothing has changed'. Starting from the three propositions that: 1) Money is extremely misunderstood; 2) 'Fiat' money is a poor store of value; and 3) Gold is an excellent store of value, Johnson provides, in a little under 10 minutes, a succinct summary of all the reasons to remain long the shiny yellow stuff. As it reverts to being 'the most marketable commodity' once again, with the 'good-as-gold' USD continuing to lose its purchasing power over time, Johnson provides some thoughts on the periods of deflation and how gold plays into that end-game: "If gold were not a good store of value, why do all the central banks of the world store it and hold on to it - even when crises abound?"
- 28033 reads
- Printer-friendly version
- Send to friend
- advertisements -


Barbaric! Must go polish some ounces now.. :D
Am I allowed to stitch gold into my clothing even though I'm not jewish and it's not the 1930s?
Must Read - Money: The Greatest Hoax on Earth - Merrill Jenkins - Published in 1971.
http://www.youtube.com/watch?v=pLwh9eMvcuc
To: Veyron - Yes and you may also be able to hide it in your foreskin!
In other news, they just don't make Greek Finance Ministers like they used to.
http://www.google.com/hostednews/ap/article/ALeqM5jx_rPYghNofTaBSmyiqMWa...
it is rigged.
Gold will go up along with inflation but government will special tax it so every transaction you actually lose money.
plus in general beware of any investment that is at 30 year highs.
bernanke is going to pull japan deflation on china in a few years after chinese dumb money overinvests in US assets. that's how US keeps coming on top, but deflation = gold prices sinking.
"Deflation" under a fiat currency regime is merely a fantasy of the hopelessly brainwashed or the dishonest and desperate propagandists. If that is the outcome you expect from this financial and monetary collapse, prepare to lose your life's savings, and don't cry later that you weren't warned.
See: Minsky Moment but before you do make sure you understand EMT.
http://en.wikipedia.org/wiki/Endogenous_money_theory
If that doesn't do it for you: "If inflation is a monetary phenomenon, then hyper-inflation is a political one" --Hugh Hendry
Granny is gonna get rich beyond her wildest dreams because with hyper DEFLATION [snark], her social security check will soon be able to buy her bricks & bricks of gold...
Yeah... that's the scenario I see... Keep telling yourself that and soon enough you'll think it's true...
I'll take the hundreds of examples of fiat currency failure over thousands of years of monetary history over some egghead statist's ivory-tower academic theories with no basis in historical fact, thank you.
Very interested in historical currency deflations that are relevant. Could you humor me?
There are very few examples of deflation, and no examples of hyperdeflation on Wiki: http://en.wikipedia.org/wiki/Deflation and there isn't even an entry for hyperdeflation. the "debt deflation" page http://en.wikipedia.org/wiki/Debt_deflation lists NO examples.
Hyperinflation, however, has 32 historical examples, which start at four digit percentages, and end with numbers best expressed in scientific notation (i.e. Hungary post WWII = 89.7x10^21).
And, yeah, granny's pension and social security checks will NEVER buy her gold bullion, land, or private jets.
or even catfood...
japan... 30 years of deflation. i don't care what CPI says, the yen cost of living has gotten cheaper and cheaper for over a generation, and japan has printed more money as a function of its economy than even greece.
I am certainly steering clear of one investment at 30 year highs. Bonds.
"government will special tax it so every transaction you actually lose money"
Just like it currently taxes all the black market cash transactions that take place daily?
Yes Annie, reality trumps theory everytime.
The road to bankruptcy is paved with simple minded maxims heard on CNBC. Deflation most certainly is not bad for gold. In fact, if you actually understand the term deflation when used in the context of a fiat monetary system, you will also understand it makes the fiat currency lose value under the weight of defaults and not having an economy or tax base.
Stupid idea: All the Gold would then leave the U.S. into Mexico, Canada, Caribbean Islands, etc... never to return. Then again sounds like something Washington would come up with.
Deflation will happen regardless. It is not something BB or Japan pulled. Japan inflated tremendously for years to try to combat deflation. That is also what BB is doing because with massive debts, all the money that is newly created doesn't flow through the economy and create inflation across the board. Instead that money goes poof - it services the debt already on the books and only compounds the problem later on.
These are market forces and they eventually win no matter what monetary, political or fiscal games are played.
The why aren't all the Japanese grannies UBER WEALTHY because of all the gold bullion they bought?
"why do all the central banks of the world store it(gold) and hold on to it - even when crises abound?"
to control it, just like they control the fiat, fractional reserve currencies...
Only a tool for the government or banks would give a negative for this post.
These are must see videos....
http://www.youtube.com/watch?v=pLwh9eMvcuc
http://www.youtube.com/watch?v=ff0dcR1_ZeE&feature=relmfu
http://www.youtube.com/watch?v=3Ha8HKSUxgk&feature=relmfu
http://www.youtube.com/watch?v=0yrSHMn_CZo&feature=relmfu
http://www.youtube.com/watch?v=gwpT2lac2v0&feature=relmfu
Thanks for sharing.
My biggest take-away and eye-opener:
Putting those two in an MSM interview together back then would be similar to putting a Tyler and a rep of the Federal Reserve of St Louis in one today (Bullard?).
In fact, does this kind of debating ever happen today? Look at Bernanke's softball conferences. Ridiculous. I still want to know what that 'other' bucket on the balance sheet is that keeps growing.
How times have changed.
No. But you can stitch your diamonds and rubies into your clothes if you are Russian royalty.
You can stitch gold into your clothing but then you have to stay away from deep water. It's one thing to have gold in your boat when it sinks, as you can always swim away. If the gold is in your clothing and the boat sinks, either you sink or you emerge from the water naked. maybe that's fine with you, but I'd hate to be laughed at that way.
Shrinkage?
Depends - I think I could manage to swim with an extra 32 ounces of gold. That's a years salary, and plenty to get you started anywhere. Not that I actually have two pounds of gold, of course. You know with the boating accidents and all...
one of these days you might spend that gold on some better boats..
"It's one thing to have gold in your boat when it sinks, as you can always swim away."
what do you expect when you buy a concrete lifeboat?
Surviving The Apocalypse... In A Lifeboat"If gold were not a good store of value . . . " etc etc
and if the original version was really If I Were A Rot s child . . .
then, bb, there only ever was one answer:
when it comes to that balance of books . . .
Tra Dish shun
http://www.youtube.com/watch?feature=player_detailpage&v=gRdfX7ut8gw
Tradition!
How come Zerohedge never features Martin Armstrong's writings?
Good question.
Come on... Armstrong has been through all that pain because he stand in front of "the club", what did you expect?
Some say Martin has lost his mind since he came out of prison. I believe he has been silenced. Jim Sinclair thinks the same.
http://armstrongeconomics.com/2012/06/21/operation-twist/
Because some of us don't like reading things written in crayon?
CEO of Goldmail pushing gold.
Thanks ZH!
Would you be interested in adding some INTELLIGENT discourse about what the person STATED, rather than attacking the person and his position?
Couldnt get the presentation to play. So I can't comment on substance.
And your vociferous defense posted at 06/22/2012 - 14:24 of a 10 minute presentation posted at 06/22/2012 14:19 -0400 is pretty asinine.
You are evidence of a bubble.
I'll take that bet!
Riiiiight, just like the endless endless "we buy gold" and now "We buy silver" and even the occasional "We buy platinum" signs, and ads everywhere I fucking turn and all the proles and middle class selling into that. Yeah, when the shoe shine boy says sell grandma's gold, thats fantastic evidence of a bubble. Where would you put your money right now?
Palladium futures, south sudanese pounds, short monolines and bitcoin, plus the typical BBB.
GET OVER "BITCOIN", IT'S LIKE A FUCKIN' ETF, BASED ON GIGABITES.
"Phuck you asshole."
This is hillarious. This CEO argues that gold is a good store of value because: 1) money is misunderstood; 2) 'fiat' money is a poor store of value; and 3) Gold is an excellent store of value. Read that. Let it sink in. Is that not the most absurd argument you've ever read? And yet you're attacking the guy who's attacking this paid advertisement?
That was a summary - and I think the video which is not working, may elaborate - So Calm down.
knave
For an intellegent and much more elaborate discussion of the MoE and SoV aspects of currency and gold FOFOA is well worth the effort. He has posted several long pieces on the historical role of gold and analyzes some of the historical events that have changed those roles.
jim rogers does not believe gold is a bubble. just a fyi jim rogers...
You should totally believe everything you hear on CNBC and read on the interwebz.
Cause people are honest and generous with investment theses. Surely they would share any informational assymetry live on national television in exchange for $200 appearance fee.
so i should get a krugman avatar and argue for monetary tightening on here?
Not sure your point, or if you have one, but I think you should keep your handle and avatar the way it is.
You are actually Arthur Fonzarelli right?
My point is why take the avatar of one of the main backers of gold and what it stands for and then take the other side. You claim he feels differently ...Oh wait you are at the secret meetings where your avatar spews the total complete opposite of what he says in public. Can you let me know when the next one is?
I know I know I am so ignorant in believing him or taking his word....thanks for your concern. You seem much more genuine.
Fonz and Rogers
hopefully you are well beyond just believing what various people say. Get yourself a 'perspective' (have seen some good ones on ebay). Learn what to expect if your new 'perspective' is working right and compare new information to what your perspective has predicted. If your perspective predicts say "UP" but the world keeps going "DOWN' then you might need a better 'perspective'. Try a few out and soon you will stop listening to the daily diatribes of even smart guys like Jim Rogers. Who knows maybe some day you will preserve your wealth ...all because you saw what was coming......with you very own 'Perspective'.
you are welcome.....I got mine at blogspot...
I didn't fade Beeland, I faded the lame video ZH posted. Or tried to post.
I have no idea how JR is allocated nor portend to. You, on the otherhand seem to have knowledge of his holdings, or portend to.
Also, your second post doesn't have a point either. Just saying "My point is..." and then asking a question, doesn't mean you have a point.
My point was in the form of a question. I disregard grammer and spelling on here. It's very liberating. You go ahead and waste your time with keeping track if you wish.
So let's wrap this up. Your response to me claiming that Jim Roger's does not believe gold is in a bubble is that I should not believe what I hear on cnbc....thanks so much for the insight. Your brilliance is overwhelming.
By ther way there should be a space between Jim and Rogers.
"I disregard grammar,". "there should be a space."
#Ref!
Huh?
Dude.
Gold is money. It's going higher, dunno how why or when, but it's a cheap and safe enough trade to wait it out.
But...
Retards defending a tautological gold commercial without even seeing it or knowing the speaker makes me question the thesis.
Fonz: keep rebutting contentions nobody made, and setting up strawmen. Just know all of us that aren't skin popping bath salts are laughing at you.
You should read below for a refresher. You point about the video I actually agree with. It seemed odd however coming from a Jim Roger's avatar and so I made the comment below. To which you responded by deflecting, and you have been deflecting and back tracking ever since. Whatever...let's move on...
Me: "jim rogers does not believe gold is a bubble. just a fyi jim rogers..."
You: "You should totally believe everything you hear on CNBC and read on the interwebz.Cause people are honest and generous with investment theses. Surely they would share any informational assymetry live on national television in exchange for $200 appearance fee."
You have no idea what JR thinks of gold. Despite what's said in books, or in chats with Maria Bartiromo.
Despite the honesty uber-wealth, self soveriegnty and a frontal lobe can bring, he didn't fleece the markets and crack a central bank by tipping his hand.
You are well spoken and you definitely watch a lot of cnbc for a guy that deems it dangerous. He does not believe it is a bubble. He is on record. He has been on record, and he has been correct. If his intent is to fleece me he really fked up because by listening to him 5 years ago I did a hell of a lot better than I would have elsewhere.
Congrats on your frontal lobe and your conspiracy theories and your sun tzu reading. I hope it serves you well.
Double post
Well...all Central Banks...except one.
Lonestar....hust a guess but .338LM? with a fancy Hornady tip?
Gold IS money, end of story.
So are seashells.
But a hell of a lot more people would trade stuff for gold than for seashells...
power is money these days.
power to bail your self out
power to print money
power to get inside information
power to manipulate the system
power to control % of resources
power to sabatoge your competition
power to change the rules in your favor
ex-KGB didn't make money first, they got power first then monetized power over state assets into private wealth.
America is headed down that path with fiat currency being inflated away while power grows with increase in population.
So is paper, worth nothing.
No, it has its uses.
it's great for starting fires and wiping asses...
but's it best put to use in ancient things called books.
Does a Kindle make good kindling? Not so much...
"So are seashells"
~~~
gee... I just took a bunch of seashells into my local coin shop the other day & got shut out...
What am I doing wrong?
Take it to foreign shop that uses shells as currency. The point the original poster (and others) is that money is a man made concept and can take many forms. It is whatever is fashionable at the time as an exchange.
Gold is a commodity. Money is an idea.
Gold a "commodity"? Like copper, wheat or aluminum?
Gold IS a commodity in the general sense only...as MONEY.
Yeah, like copper. They still make coins out of copper. Or silver, which has 100X the industrial value.
Gold's only value is it's scarcity, and the fact people like shiny shit. So what is value and what is money? Stored labor?-That would be oil. In reality gold is just another trading vehicle like the S&P mini future. But the whole point is that money is only a construct of the human brain that only exists if people believe in it.
Could you name a country that produces silver or copper coins for general usage today?
What do you thing USA quarters are made out of? Nickel clad copper.
And they mint tons of silver coinage, I don't care if it's not for general circulation. They still make it. And I have some.
So then, you wouldn't mind trading some of your old silver quarters for some of my shiny new copper quarters, would you?
Why, just a post ago you didn't think there were copper coins anymore. Presumably because of pennies. If you're any indication of the quality of investor that the PM market has reached, it's time to take some profits.
No, you are wrong. Gold's value is not that it is scarce. In fact, gold is not scarce at all. Yes, Gold is a commodity. But gold's value is that of all the materials in the world that can be used for money, it is the best, because of its intrinsic properties, including, among others, that it is inert, easily divisible, transportable, and easily authenticated. In short, nothing works better as money than gold.
I understand why it's used.
But you if you think that it's "not scarce at all" and it's valuable because it's "that it is inert, easily divisible, transportable, and easily authenticated" then you're insane. Copper, silver, and lead all fit that description as well.
But we don't use those because there is a shit ton of it. In fact, gold is really fucking rare and is formed when a star goes super nova.
Still, money is an idea. You'll all find out if the world goes wild west.
Not quite.
Beyond food and water, "Value" is just an idea.
You can't eat either money or gold.
This clamoring to buy real, tangible assets makes no sense beyond farmland.
That includes stocks. That includes bonds. And it includes gold. The value of those items exist only in your mind. The value of farmland exists in your stomach.
Crashis
Farmland if OK but if you are looking for the best protection I'd go with gold.
No. You buy shit that enables your survival. That means farmland.
You see, preparing for society to collapse you need a food source, a water source, and shelter, and then "money". You sound like you're going to go with "money" and hope somebody with farmland will sell you food. But what you're not factoring in is that in a total collapse we are going back to oxen power and there will be little in the way of space production.
So in a total collapse, there will be mass starvation? Sorry, you can't return to oxen power without killing a large percentage of the worlds population. Believe it or not, currencies can collapse, labor and resources will still remain. So long as this collapse doesn't involve massive shortages of oil, natural gas and other forms of energy the collapse will merely be a monetary collapse. Please tell me, how long did it take for Gernamy to recovery from hyperinflation? What about Argentina? The fact is.. a financial collapse is far diffferent than a total collapse that would involve people returning to horse and buggies. Pick up a god damn history book or economic textbook. What happened when the Soviety Union collapsed? Believe it or not, people in Russia still drive cars and use modern farm equipment. When you have a currency crisis and a financial collapse, people will suffer, there will be food and energy shortages and many people will lose everything. And because gold has value as a medium of exchange, people who have gold will be able to trade it for other goods and services. I don't give a shit if you have farm land. Good lucky trying to barter crops for other things like fuel, equipment and resources that you cannot produce yourself. Funny how money works...
Sorry boss. I'm preparing for a world without oil. And war, and chaos.
Hope for the best, prepare for the worst. So I'd tell you to "pick up a god damned history book" and compare the exponential population growth over lapping energy consupmtion. We're in a superspike. Over run. Due for correction.
You may be preparing for a world without oil, and one day we'll get one. When that time comes, you had better believe that there will be a whole lot of war and chaos.
I like to think of gold or silver like a battery or even a capacitor. It can be charged up (via your labor, or profits or whatever) and store that energy. Later that stored energy can be traded for some other form of stored energy.
No matter how crazy the world becomes, there will always be some kind of trade. Gold, silver, food, and fuel will be universal currencies.
You are correct. But as they say here out west, whiskey's for drinkin', water's for fightin' over. And in a world where industry has broken down you will find that many things aren't available for sale at any price. If I have the last shovel, and you have a gold coin guess what-no shovel for you. There will be trade, and the items you listed will be exchanged as currency (I'd add tools to the list), but there when there is no surplus of goods or much spare capacity in agriculture (used to be >50% labor force/will be again) gold and silver will only go so far. I think people have confused my points to be anti-PM, when I'm merely pointing out limitations.
Do you think the supply of oil, natgas, and coal will just vanish overnight?
You think the Saudis and Kuwaitis and Russians won't have excess supplies (ie, produce more energy than they can consume) and not want to sell the surplus? And that they won't want PMs in exchange for them?
You appear to envisage an overnight mad max scenario. If this is what you believe, you shouldn't be buying farmland - you should be buying surplus armored personel carriers, assault rifles and claymores, and then, after the hammer falls, offering your 'protection' services to whichever group of farmers offers the most share of their production in exchange.
What's with the "thanks for becoming a gold mail customer" video? Wrong link?
what's the gold oz to spiderman towel ratio?
Depends upon what you have used the towel for!
Hitch-hiking the galaxy...
Boy that last article disappeared faster than a frozen flake of CO2 on a hot plate.
I'm listening a guy called "Brent" which is an oilfield over here telling me what I already fucking know, I don't want plaittudes anymore or a comfort blanket or constantly re assuring about this fucking mess I want change and i want it NOW
Nice advert for the man's gold book.
The fact that a central bank holds a particular asset don't make no nevermind to me.
You can't eat it! Uh wait...http://images.search.yahoo.com/images/view;_ylt=A0PDoX.UuORPkVkA.LyJzbkF;_ylu=X3oDMTBlMTQ4cGxyBHNlYwNzcgRzbGsDaW1n?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3Fp%3Dexpensive%2Bgold%2Bdesserts%26n%3D30%26ei%3Dutf-8%26y%3DSearch%26fr%3Dsfp%26tab%3Dorganic%26ri%3D4&w=540&h=504&imgurl=3.bp.blogspot.com%2F_2fdwS3Y1VhU%2FTL58tTZltcI%2FAAAAAAAAodM%2FcoIUAz6DE14%2Fs1600%2Ften_of_the_640_06.jpg&rurl=http%3A%2F%2Fwww.coolpicturegallery.us%2F2010%2F10%2Fmost-expensive-desserts-in-world.html&size=28.7+KB&name=gold+gold+gold+although+this+dessert+chooses+insanely+expensive+...&p=expensive+gold+desserts&oid=5798b52e72c76a3482da345ccc0fc951&fr2=&fr=sfp&tt=gold%2Bgold%2Bgold%2Balthough%2Bthis%2Bdessert%2Bchooses%2Binsanely%2Bexpensive%2B...&b=0&ni=144&no=4&ts=&tab=organic&sigr=12e7q8eil&sigb=13ltp7hi8&sigi=12uh2knsk&.crumb=QtF9whukg.j
junked for ridiculous url
Don't hate me 'cause MY url's bigger than YOURS.
Junked again for blaming a huge URL. Ah fuck it, I'll junk myself for replying to that huge URL post.
Didn't Moses feed gold to the Hebrews while in the desert? Since it was from a golden calf, perhaps he added tomato sauce and cheese to help it go down more easily.
central banks were selling it in mass in the 90's and now are back in the market.. so i would never do what a central banker is doing. they know fuck about money other than they can allways print more. Is gold a good store of value Yes it is.. is it a great investment not really long term.. productive assets are better investments ( as long as you dont have scumbag management draining all the profits).
Gold is an instrument of saving. You invest in gold to preserve your wealth. When the economy is functioning in a healthy maner, then the "productive assets" can be considered a wiser choice. However, when the economy's of the world are breaking down, and all levels of society are more concerned with how to protect themselves rather than become educated on and help resolve the problems, then it's time to consider how to best weather the storm. Thankfully, the simple act of self preservation is an effective tool for cleansing. People pulling money from the banks will result in bankers being exposed as nothing more than leaches when their inability to profit through sound business decisions causes them to suck even more tax payer money down the drain. Bankers reaching for more money will simply cause more public awareness and the feedback loop will eventually force one side to take action. Either the people rise up and take back their government (including starting a new one) or the bankers rise up and use every force in the police state to maintain their dominance. Either way, it spells change, but only one way results in healthy markets worth investing in. In the mean time, I hold my money in gold and the government can print all they want, they can't get my money. I have a feeling, others will follow the path of self preservation and be drawn by the glimmer of gold.
'Someone's team is there to help'
And I just stepped off of the banana boat.
The illusion is NOT for us PM Gold/Silver stackers and TPTB are spending BILLIONS of dollars trying to conspire against us 1-2% that have it...
NO -
The illusion of reality is for the easy prey -
the sleeping,
not capable of independent thinking,
zombified,
fixated on useless gadgets,
consuming - MASSESS!
Am I the only one having trouble getting the video to load?
It worked for me.
As a store of value... as long as the government or the TSA doesn't steal it all from you...
Same thing can be said for land, currency or any other asset. At least Gold is easier to hide and more portable.
There is much debate as to whether farmland or gold & silver is a good investment and a good store of value. I buy gold & silver for one reason only. I don’t have to REGISTER the transaction with the government and I don’t need put a license plate on it.
Anything REGISTERED with the government (including your children!) can be taken away from you at any time. Think you own your vehicle? Nope, just ask the cop who had it towed away. Think you own your land even though you paid for it in cash? Nope, just ask the local politicians who evicted you for non-payment of property taxes. And the list goes on.
True ownership of anything is something you have that cannot be taken from you unless it is stolen from you outright because your big mouth told the thief where to find it. I repeat, anything REGISTERED with the government is NOT YOURS… it is theirs, and you get the privilege of paying for it and using it under the illusion that you own it.
Do any of you think that just because your remote mountain cabin with 2 acres of productive veggie crops is so far off the beaten path that it won’t be taken from you in a SHTF scenario? (for the good of all the people, of course). You could be on the moon… the government still knows where you are. But they won’t know where your gold & silver is stashed unless you tell them.
The current market makes no sense at all. With very few exceptions the Krugmans of the world are woefully challenged to explain anything. We are fortunate to have Tyler and others set the record straight againt very strong institutional headwinds.
However, F. Bastiat knew best when he wrote:
"In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause - it is seen. The others unfold in succession - they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference - the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, - at the risk of a small present evil."
Anything that has intrinsic value for barter, survival or maintain/improving the quality of one's life that can not be stolen by paper-pushers, will have intrinsic value. I see it is still obvious day on ZH.
Umm I stack, but this is a commercial for a newsletter. Wtf?
Now that the video is actually playing I see there isn't a whole lot of new info in there. Pulls it all together nicely though.
"Nothing has changed"
I beg to strongly disagree. My account has changed A LOT up and down.
Right now I am out and looking for a decent entry soon.
Bottom line is if your timeframe is 5 years or armageddon whichever comes first and you don't care about drawdowns in your account then go for it otherwise be very cautious and trade the hell out of it as best you can...........
I don't know how many time I 've heard the bottom is in over the last 3 months by the permabulls...............a lot of dead money sitting out there...
I'd rather have dead money than shrinking money. That's the whole point. Gold holds its value, which is why its a good store of value. Only when gold supply and demand get out of whack in a fear-episode or panic, the price goes up even more than underlying inflation. Betting on that is a different thing altogether, that'st a bet on speculative events.
If you're in gold because you think there's going to be a panic, and ahuge price jump, you need to be patient. If you're not patient, then you're the one panicing.
Anyone who would idiotically and/or disingenuously imply or state that gold is a poor store of value (in a depreciating fiat currency environment) would have to necessarily also accept the conclusion that gold has become cheaper in value (not price) over the long term, which it demonstrably has not become.
Where the fuck are these idiotic and anonymous downarrowing junkmonkeys coming from? I state an unassailable logical proposition, and get two downarrows for it? WTF?
Akak I see a lot of extremely intelligent people on here say some amazing things that I take note of. Then I see the same people get defensive that some idiot gave them a down arrow like this is facefart or something. Who cares?
who the fk just junked me?!
LOL. I presented a physics equation once as a retort and got junked.
I junk'd ya for say'n retort........secret word of the day, yesterday.
The ego's have landed.
You are gett'n "Super Junk'd".........stop bitch'n about gett'n junk'd.. after all there is lots'o Junk out there.
"Get Junk'd Day"
Ccanuck
Who cares?
Apparently you do. Let it roll off. Some people just love mucking up posts. Stay frosty.
Hey Mr. A... Theyr'e just a bunch of ass-creatures that crawl out of the sewers on Fridays.
I'd like Robomoron to actually write an article like out little buddy L use to do... then we'd have a chance to expose him for what he really is. Just an ADHD two-bit troll who's probably living in his mommy's basement because he can't affort a real pad... or hold down a real job.
The forcefulness of your logic forced them to reevaluate their position and it made them temporarily angry so they lashed out. Or maybe you just used today's secret word.
I junk'd him for saying Junkmonkey.........shh..... it's the secret word today.
Edit; I gave you +1 for first statement
@ akak-I junked you because you bitched about being junked.
No worries.... you can't help stupid.
over any lifetime horizons i've measured (i'll define as 75 year intervals), gold has held or increased it's "value", which i'll equate roughly to "real" price. but quite obviously, it has not held it's value over generational horizons (i'll define as 25 years). a generation is "long term" to anyone, and the example is obvious because almost all of us have lived through the period.
let's say you owned some gold in 1980 when the price pushed into the high 600s in USD. if you thought gold would continue to be a great store of value for the long term even from that point, then you held on. if you didn't have any, perhaps you bought some. fast forward a generation. in 2005 your gold was worth nominally 35% less, and in CPI-adjusted terms worth 73% less. the max drawdown in nominal terms was around 62% in nominal terms (19 years later, 1999), and 83% in CPI-adjusted "value" terms (21 yrs later, 2001). AND that's using a systematically downward-biased government CPI figure... with a true, higher inflation measure, the maximum drawdown in value terms was probably closer to 90%. against a real asset class that outperformed CPI (how about housing over that period?), you probably could buy only 5% of the house in 2000 that you could have in 1980 with the same ounces of gold. to make it easier to think about, imagine 1000 ounces of gold. in 1980, you could have bought 650,000 USD worth of house. in 1999, you could only buy 250,000 USD worth of house. during those 19 years, home prices increased very quickly... 650,000 in 1980 was something larry ellison might have bought; 250,000 in 1999 was something a burger flipper at mcdonalds might have bought. so by not selling your 1000 ounces and converting into a house, your home converted from a mansion in any community you want, to a very median home. anyone who held gold over that period got wiped out in real purchasing power, whether in homes or any other real consumption good.
gold price since 2000 has done the opposite and rallied massively in nominal or real terms... unfortunately to anyone who held or bought gold from 1980 to date, you would still be down 19% in CPI-adjusted terms.
the fact that gold, when bought/held at nominal highs, can lose nearly 90% of its value over a generation of our lives... AND the fact that most of us have lived through this period, is why so many people do not buy gold here, at prices that are just 20% from the highs.
the question is where are we now? or to make the analogy tighter, was gold last year (spiking through 1900 usd/oz) priced more like 1980 or more like 2000? there are strong arguments for both. it's more like 1980 in the sense that the price had indeed rallied tremendously, ostensibly due to fear of inflation or monetary debasement. it is more like 2000 in the sense that inflation recently has been closer to the level of 2000 than 1980 (true inflation has always been higher than CPI, but for reference CPI was ~2% in the 2000s and maxed out ~15% in the early 1980s). it looks to me as if gold price has moved in response to a fear of something that hasn't happened yet.
thoughts anyone? are we back in 1980 or back in 2000?
Gold is definitely money.
However, the value of it can fluctuate wildly, as high as $1,800, as low as $800.
The "Almighty U.S. Dollar" value is stable as a rock. In fact, as of late, it has been dramatically increasing in value compared to a commodity basket or compared to other currencies.
Gold cannot maintain a steady value relative to other currencies and commodity items, therefore it is deemed to be a "Risk Asset".
Way too volatile to be ever accepted as a currency, except for emergencies.
And in an emergency, you are typically forced to sell it at the worst possible time and worst possible price.
What you can get for it is entirely depenedent upon the paper market price which is pushed around by Algo/Igor/Robo machines, which can change day to day, month to month, with huge volatility.
Who the hell needs to deal with that kind of brain damage?
Any wonder why the U.S. Dollar is the "Reserve Currency of the Century?"
Are you a wizard?
in LARP-land, probably
Everyone's favorite graphic (to go along with Robos 'Reserve Currency of the Century')...
~~~
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/06/Reserve%20Currency_1.png
I was thinking Fucktard.
"Way too volatile to be ever accepted as a currency..."
see this 20 year chart for graphic evidence of the absurdity of the above claim:
http://mtanga.com/gold20yr.png
'Gold cannot maintain a steady value relative to other currencies and commodity items, therefore it is deemed as a "Risk Asset".'
It can. The problem is that gold is increasingly being purchased by idiots who only hoard it and forget that to bring about change in the monetary you have to also get others to actually transact with it in the 'real' economy.
Starting with silver would go a long way to bring about this change.
The facts are really as follows:
Gold is a tier 1 asset.
Commodities have declined over time relative to gold.
The dollar has not been stable, in fact it has steadily declined, losing purchasing power in the last ten years to the tune of 30%, as inflation has increased over this time.
That means that commodities, unlike gold, have lost value in a declining currency. This will affect all commodities producers, as their Net Present Value decines against inflation, and their Internal Rates Of Return decline.
With banks tied solely to fallible currencies, their rates of return are dependant on short term interest rates being maintained above inflation to be sure that they remain solvent. They're all being bailed out to the tune of trillions in capital injections to make up for the shortfall.
Even government bonds, though their prices have risen, have not provided a stable return because their yields and their prices have fallen behind inflation, causing pensions funds to go broke.
You can reliably say that pension funds, banks, governments and central banks will have to eventually rely on gold.
I agree on all except your last conclusion, as gold provides no yield, and pension funds all need a yield of about 8% to meet their expected obligations.
What are the pension funds going to do, buy gold and write covered calls against it for income? I don't see that happening in the near future.
If I may point out, pensions funds are backing huge commodities depots and warehouses-full in the hopes this will store value better than the miners, all in defiance of your special objection to providing no yield.
Would you care to explain why they might want to jump on the hoarding bandwagon?
http://scharts.co/LrKbgN
-F6
Ben, give it up already.
I guess that is why real (non-BLS bullshit CPI) consumer prices continue to increase ~8% per year, right?
More crap from RobotLemming, who never met a statist or central banker that he didn't like.
(For the record, though, I strongly suspect that RobotLemming is merely "Tyler" fucking with us for shits and giggles. He should know, though, that doing so does nothing to enhance the reputation of this site.)
Indeed - I was actually looking forward to reading HoboTrader's latest silliness but couldn't get past that sentence before I spewed all over my keyboard.
"Gold cannot maintain a steady value relative to other currencies and commodity items, therefore it is deemed to be a 'Risk Asset'."
Sigh. You have it backwards. Fiat currencies cannot maintain a steady value relative to gold. Gold is the reference.
One of the charts I pull in on my home page... Not so stable.
http://bit.ly/LH9Uxe
You have your perspective wrong, it is the fiat money which is changing wildly in value, not stocks or commodities or gold. Primarily because the mighty dollar is 95% debt. The leverage causes massive swings.
Robo idiot says: The "Almighty U.S. Dollar" value is stable as a rock. In fact, as of late, it has been dramatically increasing in value compared to a commodity basket or compared to other currencies. Gold cannot maintain a steady value relative to other currencies and commodity items, therefore it is deemed to be a "Risk Asset".
You truly are blithering idiot.